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October 11, 2009

"Prison Time or Restitution?: Sentencing for fraud often a balancing act"

The title of this post is the headline of this article from my local paper, which raises some classic hard questions in the sentencing of economic crimes. Here are snippets from an interesting and effective piece:

It's unlikely that Melanie Chen's victims will ever recoup the thousands of dollars they lost to her cancer hoax. A Delaware County Common Pleas judge sentenced Chen on Tuesday to eight years in prison for swindling her in-laws and other relatives and friends out of $792,191 after convincing them that her husband, Phylip, 38, had cancer.

Chen, 30, of Columbus, also was ordered to pay full restitution, but Assistant Prosecutor Bill Owen knows from experience that probably won't happen. The money is long gone....

Chen's victims have conflicting emotions, which isn't unusual in fraud cases, Owen said. Some are more concerned with recovering the stolen money than with punishment, while others seem satisfied that Chen is in prison. Phylip Chen also faces criminal charges and awaits a trial scheduled for Oct. 27. "It's just very difficult for a victim of an economic crime to ever feel any closure," Owen said.

Sentencing criminals convicted of fraud is a balancing act. Judges often impose a prison term for financial crimes, especially if the case involves multiple victims, said David Diroll, executive director of the Ohio Criminal Sentencing Commission. "The dilemma the courts have is, on one hand you have many people bothered by this and outraged that they've been scammed," Diroll said. "You weigh that against whether sending someone to prison gives them any meaningful shot at restitution."

Before deciding on a sentence, judges consider the loss to victims and the criminal's ability to pay what they owe, Diroll said. They also consider the person's background, education and employment history. That's why punishments vary from court to court and judge to judge, even for similar crimes. Sometimes, judges suspend prison sentences or grant early release from prison so that restitution can be collected sooner.

A state tax agent fired in February for theft recently was ordered to repay the $67,657 she stole from taxpayers over 14 months. Franklin County Common Pleas Judge Laurel A. Beatty suspended a five-year prison term for Lisa M. Finnell, 41, and ordered her to complete five years of probation instead. "I told her I preferred her making payments to the taxpayers of Ohio than sitting in a prison cell," Beatty said after Finnell's sentencing on Sept. 30.

But in many cases, the defendant doesn't have the means to pay restitution, particularly when it's a very large amount, said Mark Schweikert, executive director of the Ohio Judicial Conference and a retired judge. "Each case is unique and has its own set of facts, and each offender has their own set of circumstances," Schweikert said. "That's why we have judges and not computers making those decisions."

Because prison time imposes lots of tangible costs while providing few tangible benefits to either victims or society, I am always inclined to favor significant economic sanctions for economic crimes. Specifically, I think both restitution and fines paid to a general victim compensation fund should be regular part of sentencing for all economic crimes.

My broader hope is that, if and when economic crime victims start seeing efforts by prosecutors and judges to make them whole, these victims will start actively advocating punishments that enhance the chance of successful offender reentry (which should increase the ability of an offender to make restiution) rather than just urging longer prison terms (which generally decreases an offenders economic productivity).